Ready to go Net-Zero? Read the simple steps to take to make your current home produce enough energy to run itself! >>

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BC to ban Duel-Agency in order to increase consumer protection, and could possibly be the first of many provinces to do so. >>

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Looking to buy a house for a bargain? Look in January!Looking to sell your house? Don’t list it in January! The statistics don’t lie; find out why January is the best time for bargain hunters to buy a house. >>

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There are new rules when Buying or Selling a house with a Tenant. Be sure to keep up to date so you stay protected! Reading this article is a good start! >>

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The rapid increase in housing prices has pushed CREA to try and change RRSP rules, to allow parents to take out money for their children’s down payment. Ultimately decreasing debt and increasing buying power for first-time buyers. But whom are they really trying to help? Read more here. >>

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New Federal Court ruling may force Toronto Real Estate Board (TREB) to make more information available to the public. This in turn could increase competition and possibly lower prices, so why is TREB fighting so hard to appeal it? Read here. >>

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With interest rate hikes looming in the near future, learn what it could possibly do with respect to mortgages, housing prices, demand, and more. >>

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Breakups can be tough, especially when you two have a house or condo together. Read this article for advice on how to property split your assets after a big split.>>

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The Bank of Canada announces that it left its rate locked at 1%, however points to many recent positives that could support higher rates in the near future. >>

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A By-Law requiring rental housing to be licensed has been blocked by Mayor Drew Dilkens, however many people are calling for change as the sub-standard housing rental market is become dangerous and in some cases, fatal. Read more about the pros and cons of the proposed by-law here. >>

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Even after the recent housing price surge in Windsor, we are still the cheapest place to own a home in Canada! Read the staggering difference in prices around Canada here. >>

Thursday, December 7, 2017

Part of the boom we’ve seen in our local Windsor-Essex area in the past few years has been attributed to the large segment of Windsorites moving back home.Whether they left for jobs, school or other factors, people are migrating back in droves.For those of you still weighing a potential move back home to Windsor-Essex, today we are going to try and push your decision over the edge and discuss what you are missing out on!

Traffic

You can drive pretty much anywhere you’d like to go in 20 minutes or less!Traffic is one of the biggest issues of living in a big city and having a long commute is a big contributor to issues with stress and quality of life.Give up that two hour commute and spend more time with family or at the gym everyday ☺

Detroit

I don’t know if you’ve been living under a rock, but Detroit is experiencing a renaissance these last few years.Lots of exciting developments are underway and tens of thousands of new people are living and working again in the city.As it grows, our area is becoming a suburb of Detroit and offers us access to many big city amenities including a major airport, all four major sports teams (Major League Soccer is also in the works), shopping, bars and restaurants, and also a large job market as many cross border workers can attest to.

Cheap Real Estate

You probably already knew this one, but Windsor-Essex still offers some of the cheapest real estate in Canada.As you get priced out of the large Canadian markets, you’ll still more than likely be able to afford the type of home you desire in our area.At an average price of around $260,000, you wont have to grind it out paying a mortgage your whole life!

Weather

The YQG has one of the warmest climates in Canada. Summers are longer and during winters we often "skate" by with little snow (fingers crossed for this year).If cold winters and snow aren’t your thing, consider a move to the southernmost county in Canada.

Economy

Part of the reason lots of people left our area over the last decade was the automotive downturn and the accompanying high unemployment rate.Well, that has more than reversed course and we now hold one of the lowest unemployment rates in Canada (below 6% this fall).One of the main issues we face going forward is a shortage of workers in different sectors.Apply within!

Those are just a few of the dozens of reasons you should consider moving back home to Windsor-Essex.It really is the “Biggest Small Town” around.What are you waiting for?Make 2018 your year.

Tuesday, October 31, 2017

What the heck is a Stress Test? Why Should I care?Starting next year, it will become tougher to qualify for a mortgage.Earlier this month, Canada’s banking regulator published final guidelines for its mortgage qualification rules.For some reason it hasn’t gotten as much coverage as other news items, such interest rate hikes or Amazon HQ2.But it should have because it has serious potential repercussions for the real estate market and the economy.Today we are going to discuss what you need to know.

Who is making this change?

Canada’s banking regulator, the OSFI (Office of the Superintendent of Financial Institutions).The OSFI is responsible for supervising and regulating Canada’s financial institutions.

When do the changes come into effect?

January 1, 2018.

What changes are they making to the regulations?

They are tightening standards on uninsured mortgages (mortgages where the borrower is putting down 20% or more of a down payment on the purchase price). Lenders will soon be required to “stress test” all uninsured mortgages at the greater of: the Bank of Canada’s five year posted interest rate or 200 basis points (2%) higher than the negotiated contract interest rate.

Can you give an example of how this would work?

Let’s say you are looking to purchase a house and are shopping to line up mortgage financing.Your realtor tells you to go get pre-approved so you understand what price range you can afford.Your lender offers you a 5 year fixed interest rate of 3.19% (which would be competitive as of the writing of this blog). Before this change, you were able to qualify at this fixed rate with your lender and based on your ratios you were able to qualify up to a maximum price range.After the change, you will now have to qualify at the higher of: 4.99% (the bank of Canada’s posted rate as of writing) or 200 basis points higher than the contract rate (3.19% +2.00%) or 5.19%.In this case you would use 5.19% to qualify.Naturally with the higher interest rate your ratios would change and your affordability will drop – you won't be able to qualify for as much house!

How will this affect the market?

This will knock some buyers completely out of the market in some higher priced areas and will drop other buyers into lower prices ranges when shopping for a home.This should increase competition for starter type homes and decrease the pool of buyers in larger and pricier homes.Other people will be forced to put up a higher down payment (thanks Mom and Dad).This will also increase rental demand in most markets.

Why are they making this change?

The main reason is to slow down the runaway housing market many cities in Canada have experienced in the last 7-8 years.The regulator is also concerned about the indebtedness of the population and their ability to handle potential rising interest rates.This should reign in the mortgage segment at least.

What else should I know?

This applies to you if you are renewing your mortgage as well.The only time it doesn’t is if you are renewing and staying at the same lender.But if you decide to switch, you’ll also have to qualify with this new stress test.It is a bit concerning that some people will be forced to stay with their existing lenders because of this and knowing the borrowers predicament, the lender will not be very generous in their renewal terms.

Of all the changing regulations the government has thrown at the housing market in the last few years, this one has the most potential to really shake things up.It remains to be seen how the market will respond but it will be interesting to see!What do you think of these stress tests?Will they affect your plans in 2018?We’d love to hear from you.

Friday, October 6, 2017

It's hard to tell from the unseasonably warm weather, but we are a couple weeks into the fall season.The autumn real estate market is well under way and even if the weather hasn’t cooled off yet, our local real estate market (Windsor, Ontario) is certainly feeling a drop in temperature.Today we are going to discuss a few of the factors that have led to this cooling.

Sellers Have Adjusted Their Prices Upwards

This makes a lot of sense.We had a pretty crazy first 8 months of the year.Multiple offers were everywhere, properties were selling considerably over list price and it was a great time to be a seller.As this continued, the market adjusted and realtors and sellers began to adjust their prices to these new comps. As prices increased, demand levelled out to a more balanced market place.

Interest Rates Were Raised A Couple Times

The Bank of Canada (BOC) has now increased the benchmark interest rate two times this year, for a total of 50 bps (0.5%).Although this is a minor increase, it has affected affordability and how much house a buyer can qualify for.The BOC seems to be indicating that they are also planning further hikes into 2018.This has led to a modest softening in demand.

Trickle Down From The Toronto Market

After a series of measures introduced earlier this year to slow the housing market, the government seems to be finally succeeding. Sales are way down, prices are stalling and deals signed in the spring are running into snags at closing.A large segment of the demand in our market was coming from Toronto buyers who were relocating and/or investing in our market. Suddenly, properties that used to sell in a few days are sitting on the market for a couple months.Because of these developments, this pool of buyers has seemed to slow and put a dent in demand.

General Uncertainty

There seems to be lots of bad headlines out there right now: the Liberals are planning to change the taxation of professional corporations; anything Trump related; the US, Canada & Mexico are renegotiating NAFTA; North Korea’s nuclear program; hurricanes causing havoc; flooding (which we experienced locally); and terrorist attacks.Uncertainty is never good for markets.Markets operate on confidence, which is sometimes a fragile thing.It's difficult to quantify how much confidence is shaken by these types of events, but combined with the above factors, it probably has some impact on demand.

Sometimes it's hard to figure out cause and effect in markets but those are some of the factors we see cooling our local market.What are your thoughts on this subject?We’d love to hear from you.

Sunday, September 10, 2017

Welcome back to the Lalovich Real Estate Insider! We've been busy reading a tonne of topics and wanted to share the best finds with you. How much do you need to make to buy a house in Toronto? How did a multi-million dollar home street sell for less than $100k in California? What does the end of the Canadian housing bubble market mean for you? Find out the answers and much more in this edition. Enjoy!

Don’t be tricked by ‘buzz words’; make sure you know your options when applying for insurance. >>

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Looking at the house price-to-rent index, to balance out from the recent spike in housing prices, value either needs to go down or rent needs to come up. Based on this, the OECD predicts a 28% decline in home prices by 2020. Read more here >>

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The Ontario Real Estate Association is stepping up to become the self proclaimed “watch dog” for the industry’s regulatory body. This transformation is catalyzed by the fact that as of 2020, they will no longer be providing real estate education. Read more about the transformation here >>

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Thinking of becoming a landlord? Here are 10 tips to follow to make your rental property a successful one. >>

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A change of heart ended up costing this buyer $360,000! Learn why walking away from a deal could cost you more than just your deposit. >>

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While the housing boom drew thousands into the Real Estate career, the inevitable slowdown is expected to decimate the ranks of the inexperienced realtors. >>

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A private street in San Francisco with 35 Mega-Million Dollar mansions was sold to a couple for $90,100… all because of a $994 unpaid tax bill. Read why here>>

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Are you getting the best rates on your mortgage? Experts say people need to start comparing mortgage rates the same way they do when booking flights or hotels. Read the startling facts here >>

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Thinking of moving to Toronto? A recent study has found that to afford the average detached home, residents need an average income close to $200,000. >>

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Deciding what to do with your rental properties? Considering entering the rental property market? Be sure to read this list of every indicator to consider when selling an investment property. >>

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Going with traditional: a new mixed commercial/residential building is planned for an empty Walkerville area lot, becoming one of the first buildings of its type built there in a long time. >>

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Learning from past mistakes: it seems as though Canada’s housing market bubble is officially over, without the notoriously feared “pop”. >>

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Buyer's remorse: people are scrambling to close after the recent cool down of the housing market. >>

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The real estate association believes it's time to increase the penalty for unethical behaviour in the real estate profession and is lobbying for stricter regulations due to the fact that the current regulations are close to 15 years old. >>

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Feel like you're paying too much for your mortgage? It's likely you've made one of the top five costly homeowner financial mistakes. Find out here >>

Thursday, August 31, 2017

In our area of Windsor, Ontario, we had some very heavy rains this week. Although nothing comparable to some of the devastation in the Houston, Texas area, many people suffered substantial damage from basement flooding. The condo building I live in had 2.5 feet of water in the parking garage ☹. We thought this friendly reminder on basement flooding tips would be timely.

Follow any directives to turn off utilities. If you’re advised to switch off the main power source to your home, flip each breaker and then turn off the main breaker. You may also need to shut off the main valve for your home’s gas and water.

Be aware that submerged outlets or electrical cords may energize standing water. Keep the power off and do not enter a flooded area until it has been determined to be safe to do so by a professional.

Have an electrician inspect electrical appliances that have been wet. Do not turn on or plug in appliances unless and electrician tells you it's safe.

If the flooding is due to a sewage backup (or you are not sure), do not flush the toilet, run a washing machine, dishwasher or any other feature with a drain since this will likely increase the flooding.

Report the issue to the municipality. Documentation of flood locations helps municipal staff determine if any work is required on municipal infrastructure.

During clean up, provide as much ventilation as you can. Open windows if weather permits and use fans to dry things out.

Call your insurance company immediately. They will advise you on standard clean up procedures, contractors to call and claim information.

Make sure you take lots of pictures and document items that have been damaged or need to be replaced. Before you head out and start buying new stuff, make sure you are familiar with the coverage you have with your insurer. Keep any and all receipts for emergency work done, purchases, and/or repairs.

Insurance companies look favourably on homeowners wanting to undertake work on their own to reduce the likelihood of future flooding. Repeat claims with no efforts to reduce future risk may be sufficient for an insurance company to drop that form of coverage in the future.

Take preventative measures in the future to make sure the water stays away from your basement as much as possible. These include: making sure downspouts are extended and flow away from the foundation, gutters are clean and flowing, grading isn’t low in any areas and if it is having it filled it to flow away from the house, and having the sewer lines checked annually to make sure they are flowing and not backed up and possibly having them eeled out if need be.

If the preventative measures don’t work at keeping the water away, you may need to look at additional upgrades including: adding in a sump or multiple sumps with battery back ups, a back flow (check flow valve) to stop the sewer back up, doing the weeping tile along the perimeter of the basement, and digging up the exterior of the house to add a waterproof membrane.

Sometimes when we get a huge rain storm in a short period of time, there isn’t much you as a homeowner can do. Knowing some of these tips can help keep you safe next time and hopefully minimize the damage. Stay dry out there!

Friday, August 18, 2017

Have you heard the term escalation clause?Chances are you haven’t unless you’ve been involved in a bidding war as either a buyer or seller in the last few years.Today we are going to discuss the controversial subject of escalation clauses and what you should know.

What Is An Escalation Clause?

An escalation clause is a clause in the schedule of an offer which is designed to defeat competing offers by automatically increasing the Buyer’s purchase price by a pre-set amount over the highest offer.Usually there will be some sort of cap placed on the escalation clause where the buyer won’t go over that amount should the best offer exceed it.

When Would An Escalation Clause Be Used?

An escalation clause would be used in a multiple offer situation (bidding war), where the buyer wanted to ensure they have the highest offer price.

How Would An Escalation Clause Work?

An escalation clause would state that the buyer agrees to pay a certain increment over the highest offer received.For example, say there were 5 offers on a listing and one of them had an escalation clause, stating that they would pay $5,000 more than the highest offer received.Suppose then that the highest offer was $500,000.The buyer with the escalation clause would then agree to increase their offer to $505,000.The logistics of how to accept the escalated offer vary, but the most common way would include the seller countering the buyer’s offer at $505,000 and having the buyer accept.

Why Is This Subject Controversial?

There are a few inherent conflicts with the inclusion of escalation clauses in bidding wars:

It hurts the confidence of buyers when submitting an offer.Feeling that dealing with this sort offer is unfair, buyers may decide not to participate in these competitive situations.That could affect the confidence of the market overall.Some of these bidding war practices already have buyers feeling discouraged, so it feels like piling on.

There is a privacy issue.The only people in a multiple offer situation who are supposed to see the contents of buyer’s offers are the listing agent and the seller.In an escalation clause situation, inherently the price of the highest offer is disclosed to the buyer with the escalation clause – this really cant be avoided.And this contradicts many RECO rules.

What Is Happening In The Market Because of Escalation Clauses?
Although not illegal, the escalation clause use has been frowned upon in the market in our experience.Generally, we are seeing listing agents and sellers deciding not to deal with offers that include these clauses, and stating so right in the listing.This eliminates the potential unfairness to prospective bidders and increases the confidence in the offer process.

What Do We Think Will Ultimately Happen To Escalation Clauses?

We think they will eventually be banned by the governing bodies.The cons seem to far outweigh the pros in the market.And real estate professionals have been banning them from their listings for a while now.

So there you have it readers.Do you or anyone you know have any experience with escalation clauses?

Thursday, August 3, 2017

Thanks for joining us for another edition of the Real Estate Insider! We've come across so many topics we know you won't want to pass up. So kick back with a coffee and browse through our collection of findings.

Controversy over the Escalation Clause! A clause designed to automatically defeat competing purchase offers, it sometimes unintentionally discloses the price and contents of competing offers. Should they be banned all together? Most realtors think so. >>

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Nationalism at its finest! Meridian shows its pride for Canada’s 150th birthday by offering a 15 month fixed mortgage rate at 1.5% to help people live the Canadian dream. >>

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‘Flipping Crazy’ Canadian TV series aimed to give viewers a first hand interaction with the step by step process of house flipping set to debut on Amazon later this fall. >>

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Whose side are you on? Ontario may be forcing Realtors to choose by banning the ability to represent both the Buyer and the Seller in a deal, fearing it could create unethical behavior. >>

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Communicate value, not statistics! With vast information available to everyone at the click of a button, it’s how you interpret the information that makes you valuable as an agent. Learn how to translate information rather than regurgitate it to prove your worth as an agent. >>

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Location, Location… Location? Is living in Toronto or Vancouver really worth 70-80% of your total income? If you want to live there you better believe so! With housing affordability deteriorating across Canada, a rate hike is causing fears that some people in these highly sought after areas might run out of money for necessities. >>---------------------------------

Canada’s banks are on the ball! Less than 24 hours after the BoC announced they would raise its rate 25 basis points, banks such as RBC wasted no time raising its rate 0.25% with hopes that this raise will be a positive development in the housing market. >>

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Getting back under control. The measures taken by policy makers to try and cool down the rapidly inflating housing market seem to be taking effect, as June home sales experienced the biggest decline since 2010. >>

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Are self driving mobile homes the “starter home” of the future? With the ability to commute while you sleep, eat, work, etc. The synergistic relationship that this vehicle offers could be very appealing in the near future! >>

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Windsor’s hot selling market is showing its effect on the rental market, with rent increasing by 2% from last month. >>

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Don’t go with your gut! This company is taking the guesswork out of potential tenant screenings, giving you the data necessary to make an informed decision, instead of relying on a simple interview or credit report. >>---------------------------------

Condo owners get ready! New rules and regulations protecting condo owners are taking place this fall. >>

That's a wrap for this edition. Have a real estate topic you think we should cover? We want to hear from you! Send us your comments and your suggestion could be our next blog topic. Happy reading and enjoy the rest of summer!

Thursday, July 20, 2017

Unless you were on vacation last week, you probably saw the news that the Bank of Canada increased interest rates.A lot of commentary has followed the move with everyone sharing their opinion on the matter and what it means for the real estate market.Today we are going to share our take ☺

What should I know about what the Bank of Canada did last week?

The Bank of Canada raised its overnight lending rate from 0.5% to 0.75% last week.This overnight rate determines the rate at which banks lend money to each other on a regular basis.This affects the bank’s cost of funds and since the banks lend to consumers based on a spread, this would lead to increased borrowing costs.This is the first interest rate increase in seven years.

Why did the Bank of Canada raise interest rates?

The bank has 2 mandates:

1. To ensure the economy is operating as close as possible to full employment.

2. To ensure inflation is operating within an acceptable range (generally 1-3% annually).

The bank cited a strengthening economy and expectations for higher inflation as two primary reasons for the increase.Another reason is that the Bank of Canada acts mindfully based on how the U.S. Federal Reserve acts. The U.S. has increased interest rates three times already this year!Lastly, the Bank of Canada is concerned about runaway house prices in large markets such as Toronto and Vancouver; they want to reign in speculation and increased borrowing.

What does the interest rate increase mean for me?

The Big Banks in Canada set a prime lending rate based on their cost of funds.For the last few years, this rate has been set at 2.7%.Lots of borrowing products, including variable rate mortgages and home equity lines of credit, are based on a discount or premium based on the prime rate (ie. prime -0.50%).Therefore, rates on variable rate mortgages and other products tied to prime rates will increase as a result.In fact, the big banks had all increased their prime rate from 2.7% to 2.95% within 24 hours of Bank of Canada decision.Fixed rate mortgages or loans (being fixed) will not see a change.

How will this interest rate increase affect the real estate market?

When looking at the big picture, this interest rate increase is very small.Lets use an example to illustrate:

The current average home price in Canada is approximately $500,000

Suppose your mortgage is based on 80% loan to value or $400,000

Let's say your variable mortgage is based on the previous prime rate of 2.7%

Now your prime rate is set to increase to 2.95%

The amortization period is 25 years

Your previous payment was $1831.95/mth.Your new payment is $1882.73/mth.An increase of approximately $50/mth.

While $50 extra isn’t fun, we don’t see it breaking the bank in the big picture.When people think about interest rate increases, they think about rates rising to historical averages of 7-10%.We are nowhere near this.It would take a long succession of interest rate increases for interest rates to really affect the market.

Before the rate increase, sales in markets like Toronto were pulling back on the heels of a proposed 15% foreign buyers tax.Add chatter of increasing rates and all of the sudden people are sitting on the sidelines.This seems to be more of a perception issue with people reading the headline news.Prices were already sky high and speculators are pulling back.It's doubtful that the extra 0.25% on borrowing costs is suddenly making it unaffordable for qualified buyers who were in the market looking already.

In our home market of Windsor, Ontario, with an average price of $267,000, the affordability is very good and therefore this interest rate increase shouldn’t affect demand too much.Using the same example above, adjusted for our lower prices, we are talking about an increased payment of $27/mth.Interest rates are still bouncing off a historical bottom and have a long way to go before affecting affordability.

Tuesday, July 11, 2017

Over the last few blog posts, we have discussed the Liberal government’s 16-point housing plan they released in the spring.The centrepiece of it? A 15 percent foreign buyers tax and expanded rent controls.Another plank was reviewing the rules for real estate agents to ensure consumers are fairly represented.

The government has now published several proposals for changes to real estate agent rules and penalties and is seeking public consultation on them.One of the proposals is to ban — with some limited exceptions — salespeople from representing both the buyer and seller or more than one potential buyer in a trade.Today we are going to discuss what you need to know about double ending and how banning it will affect your future real estate transactions.

What is Double Ending?

Double ending is a term used to describe when the Listing Agent for a property represents both the Seller and the Buyer in a transaction.

What should I know about Double Ending?

Double ending usually occurs when a Buyer doesn’t work with an agent and searches for properties on their own.Once they find a property, they deal directly with the Listing Agent.

In the above situation, the seller is being represented by the listing agent by their listing agreement.They would call this an agency relationship.The buyer is only dealing with this agent because it is his listing.In this instance, the relationship is called Buyer Customer Service.It would be considered agency if the Buyer had enlisted the same Agent to find them a property, and most likely signed a buyer representation agreement.

Most of the time, these double ending situations arise from the former, where a Buyer without an Agent deals directly the Listing Agent.The later example would be rare.

Why is the government concerned about Double Ending?

This is a pretty straightforward one.They are taking the position that it is pretty hard to work in both the Seller’s and Buyer’s best interests, at the same time, given that their interests are directly opposed.It’s more difficult to maintain confidentiality as well when representing both parties.Its easy to see how this could be abused in the wrong hands.

What does this mean for me on my next real estate transaction?

If this proposal is passed, when buying your next listed property, you would be required to hire your own realtor, more than likely under a buyer representation agreement.This would mean there would be agency relationships on both sides of the transaction and in theory both parties interests should be protected.Our guess is that there will be some exceptions to the rules but we will have to see how it plays out.

What are your thoughts on double ending?Have you had a double ending experience in your real estate travels?

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Mark and Russel Lalovich

Lalovich Real Estate

Top producing Commercial Real Estate team in Windsor, Ontario. Please contact us for more info about our services by phone 519-966-0444, by email at russel@lalovichrealestate.com or visit our website at www.lalovichrealestate.com.

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